5 effective strategies for negotiating credit card debt

Under certain circumstances, debt is negotiable. That’s not a myth. Resolving debt is the process of negotiating with your creditors to accept less than the full amount you owe and forgive the rest. Creditors might be willing to do this if it’s clear that you have a financial hardship and can’t afford to fully repay your debts. 

Negotiation is an option for unsecured debts like credit cards, and you can negotiate with creditors yourself if you want to. Here are our tips to help you handle negotiations smoothly and confidently.  

Before you get started, remember to breathe. Dealing with debt usually isn’t easy or quick. But it’s something you can do. There’s a solution for every debt situation. Negotiation is a way to roll up your sleeves and get to work on improving your financial future. 

#1: Decide what you want to negotiate

The first thing you'll need to do is figure out what you want to negotiate. For example, you may want to:

• Lower your interest rate

• Eliminate certain fees

• Pay less than what you owe

Look at the details of your debt to decide what to focus on. 

For instance, if you're still making payments to your credit cards but the interest rate is a killer, you might angle for a rate reduction. Or you might ask for a temporary fee waiver if you're experiencing financial hardship. 

On the other hand, it may be better to try and resolve your debt for a percentage of what you owe if your financial situation has changed and you can’t realistically afford to fully repay your debt. 

#2: Prepare your offer

If you're hoping to negotiate the balance on your debts down, start with an idea of how much to offer. 

There's no real rule of thumb for this; you'll need to look at your finances to decide how much you can afford. While creditors might accept anywhere from 10% to 80% of the amount owed in negotiations, they're not required to agree to any reduction at all.

You should also be prepared for a creditor to counter your offer. For example, if you owe $10,000 and you're offering $5,000, the credit card company might ask for $7,500 instead. 

Assess your budget and cash reserves to figure out the minimum amount you hope a creditor will accept and the maximum amount you can afford to pay. 

#3: Get in touch with the right person

When credit card debt goes unpaid, your card issuer might transfer or sell the debt to a collection agency. It's important to know who to talk to when you're ready to negotiate. 

Start with a call to the customer service number on the back of your card and ask to speak to someone in the collections department. A representative should be able to verify whether they still hold the account or if it's been sold to someone else. 

If your account has been sold to a debt collector, you'll need to reach out to them to start the bargaining process if they haven't contacted you already. 

#4: Be confident

Talking to creditors or debt collectors might feel intimidating, but it's best to speak confidently. Show them you've done your research on the debt and that you've evaluated your finances carefully to come up with a reasonable offer.  

If they make a counteroffer, don't panic. Come back with a counteroffer of your own if you've prepared one, or ask for time to think it over if you haven't. Call back when you're ready to resume negotiations. A few rounds of back-and-forth phone calls is normal.

If calling your creditor feels too stressful, mail a letter. Find out the correct address first, and send it by certified mail or some other method that gives you proof of delivery.  

#5: Know your rights

The Fair Debt Collection Practices Act (FDCPA) is a law that outlines what debt collectors can and can't do or say when contacting consumers. For example, a debt collector can't tell you they're going to sue you unless they plan to actually do so. They also can’t threaten to send law enforcement to your home to arrest you for an outstanding debt.

If you feel a debt collector is being abusive, using intimidating tactics, or is otherwise harassing you, then you have the right to submit a complaint to the Consumer Financial Protection Bureau (CFPB). 

While the FDCPA doesn't erase your obligation to pay the debt, it does protect you from mistreatment as you negotiate with creditors. 

Negotiating credit card debt could bring financial relief

Plenty of people have credit card debt, and negotiating yours could help you find a light at the end of the tunnel if you've been struggling to pay it off. You don't have to go it alone, and you don’t have to jump in with both feet before you understand your options. Reach out for help and a free debt evaluation from a debt expert if you're overwhelmed by the thought of negotiating. Once you understand your financial situation it could be easier to create an action plan for working out agreements with your creditors.